Funds build up stakes in GW

IN THREE weeks, the Government will reclassify cannabis from a class B to a class C drug, which will cut the maximum penalty connected with it, and in keeping with this spirit of liberalisation an AAA-rated shrewd investor has been secretly dealing in GW Pharmaceuticals'shares.

GW floated in 2001 and is the first listed firm to produce cannabis for medical purposes. It develops medicines for treating many ailments, including cancer.

The company is well on its way to securing regulatory approval. The key to success will be its distribution partnerships. It appears to be off to a good start with these, too.

Canny investors have backed the shares from the start, and they rose from 81p to 254p between 2002 and 2003. But in the past few months they have slipped to 186p after a 178p low, and Patrick Evershed, the AAA-rated manager of New Star's Select Opportunities fund, took this chance to buy.

At the end of December, he bought 75,000 shares to take his fund's stake to 350,000, or 0.32% of the £207m group. The similarly-rated Ashton Bradbury of Old Mutual bought shares for the UK Select Smaller Companies fund in July. The fund controls 756,000 shares. GW is not forecast to make a profit for at least two years.